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Mutual fund cost basis election form
Old 10-06-2011, 10:43 AM   #1
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Mutual fund cost basis election form

Mutual fund of mine send form asking me to declare cost basis method. Taxable account.

Default is average cost. Other options are listed below. I'm assuming "LGUT" is best below (although I didn't know they'd do this).

Looking for any comments on best approach.

Sales / distribution is expected to be during retirement.

FIFO,
LIFO,
HIFO (Highest cost shares are sold first),
LOFO (lowest cost shares are sold first).
LGUT (lost/gain utilization - they sell lots with largest losses first, then long term gains, then short term gains).
SLID (specific lot identification - I tell them which specific shares to sell)
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Old 10-06-2011, 11:25 AM   #2
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I'd go with SLID in a taxable account but I'd usually specify the LGUT.
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Old 10-06-2011, 11:29 AM   #3
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I use specific lot identification (SLID) for funds in my brokerage account and signed up for the same in my Dodge and Cox accounts. That lets you do the LGUT if you want, or something else. For example, you might want to avoid selling at a loss if you had reinvested dividends within 30 days. Often enough I take a small short-term gain to avoid a much larger long-term gain.

SLID is what you want. Dodge and Cox allowed a secondary method when SLID was selected, in case no specification was made. So SLID with a LGUT backup might work pretty well for you.
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Old 10-06-2011, 11:52 AM   #4
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I have been using FIFO for 21 years so I can maximize the chance for having a long-term cap gain/loss, as opposed to a short-term cap gain/loss. It has been the easiest to keep track of in my spreadsheets, too.
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Old 10-06-2011, 12:02 PM   #5
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Quote:
Originally Posted by Animorph View Post
I use specific lot identification (SLID) for funds in my brokerage account and signed up for the same in my Dodge and Cox accounts. That lets you do the LGUT if you want, or something else. For example, you might want to avoid selling at a loss if you had reinvested dividends within 30 days. Often enough I take a small short-term gain to avoid a much larger long-term gain.

SLID is what you want. Dodge and Cox allowed a secondary method when SLID was selected, in case no specification was made. So SLID with a LGUT backup might work pretty well for you.
Thanks- this is Dodge& Cox - and they do have that "backup" designation - Thanks !
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